Transcript: Debt Commission Chairmen on 'Fox News Sunday'

The following is a rush transcript of the April 25, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, ANCHOR: The president's debt commission holds its first meeting Tuesday and its job couldn't be tougher. Finding some way both parties will accept to cut the trillion-dollar deficits that stretch to the end of this decade.

Joining us now are the two co-chairs of the commission, former Republican Senator Alan Simpson and Erskine Bowles, who was chief of staff to Bill Clinton.

Gentlemen, let's start with the size of the problem. According to the non-partisan Congressional Budget Office, under the Obama budget plan, by 2020, the national debt will be 90 percent of the U.S. economy. That is the highest percentage since just after World War II.

Senator Simpson, how serious a threat is that to the country?

FORMER SEN. ALAN SIMPSON, DEBT COMMISSION CO-CHAIRMAN: Well, you tagged with saying it might be the toughest job, certainly that I've had, and I did 18 years in the Senate. I did the Iraq study group. We have done a lot of things — Americans for campaign reform. This is a suicide mission. And I'm glad that my fellow Erskine Bowles and I are jumping without a parachute.

And it is not just unsustainable, it's unconscionable what is going to happen to this country unless we, and that's politicians and non- politicians and academics and citizens realize we're not Republicans and Democrats first; we're Americans.

WALLACE: Mr. Bowles, this president and this Congress have added trillions of dollars more to the deficit, which was already big when they came into office. Why should we think they are part of the solution and not part of the problem?

ERSKINE BOWLES, DEBT COMMISSION CO-CHAIRMAN: Oh, Chris, I think it's fair to say that when President Obama came in, he inherited a budget that was structurally unbalanced. He inherited two wars, and he inherited an economy that was on the brink, and he has taken some steps to try to bring it back.

But I don't think we can look to the past. We have got to look to the future. If you look at where we are today and you just look at the mandatory payments, they equal the entire revenue that comes into the U.S. government. That means every dollar we spend today on the military, on homeland security, on education, infrastructure, transportation, it's all borrowed, half borrowed from foreign countries.

That is a formula for disaster. The president has said he will be behind this effort 100 percent. He said everything is on the table. I believe him.

WALLACE: Gentlemen, as you begin your work, speaking of yourselves, not for the panel, help us understand what your strategy is for attacking the deficit. Senator Simpson, let me start with you, but I'll give Mr. Bowles a crack at this afterwards. Do you look to tackle spending first or taxes? And do you worry as you go after the deficits about possibly pushing this fragile economy back into a recession?

SIMPSON: Well, I don't worry about anything. Erskine and I are in this one for our grandchildren. Somebody said, oh, they're stalking horses for taxes. I'm not a stalking horse for taxes. I had a terrific record on that. I'm a stalking horse for my grandchildren.

But this is not about what George W. did or even what this president did. This is — this is a situation where I hope in my naive green pea way that we can get all 18 of these fine people to say, this is where we are. This is — this is where we are. We are using only the actuaries of Social Security. We are using only the actuaries of health care. We're using only CBO figures. We're not going to go by our own figures. We're not going to say we're going to grow our way out of this. Hell, we could have double growth for 30 years and never grow our way out of this. And hopefully we can all say, this is where we are.

Then if we can do that — and that's my naive objective — then we can start letting blood. Somebody said, well, is the new health care bill off the table? I said, nothing is off the table, absolutely nothing.

WALLACE: Mr. Bowles, your strategy for attacking the deficit, and do you go after spending first or taxes? How do you go about this?

BOWLES: Chris, look, first of all, Al and I are 100 percent together. We're a team. I know that sounds strange to Washington to have a Republican and a Democrat agreeing with each other, but we do. My strategy is the same as Al. Let's make sure the American people know we have a looming crisis. To do that, we have to have a real set of numbers. That means using the actuarial numbers from Social Security and from Medicare, and using the numbers prepared by CBO that most people agree are correct, the Congressional Budget Office. And then once we have gotten real numbers out there, let's see if we can persuade people to trust each other, come together, and really take some of these tough stands to bring down spending.

WALLACE: So you want to go after spending first before taxes?

BOWLES: Look, I think we have to go after everything. Everything has to be on the table, whether it's revenue or spending. I personally would like to go after spending first.

WALLACE: Senator Simpson, you anticipated some of the chatter here in Washington. House Republican Leader John Boehner has already called this commission and let's put it up on the screen, "A partisan Washington exercise rigged to impose massive tax increases and pass the buck on the tough choices we need to make right now." Question: You pride yourself on straight talk. Do you really believe that the Republicans here in Washington are going to be willing to go along with serious tax increases?

SIMPSON: Well, I really wouldn't drag those old bones out of the graveyard. That was a statement long ago, and Boehner has appointed three fine people from the House minority, Ryan, Cave (ph), the gentleman from Texas. And we have talked to them, Erskine and I talked to them, and they say we feel that this is — we must do something. And we're here to do it.

So, if the argument is always just going to be on any kind of thing Erskine and I do, well, let's see, you're going to do taxes first or spending first? I haven't the slightest idea.

But I know one thing. If we can get the figures before the American people, then we'll sit down and then all bleed and bitch from there.

(LAUGHTER)

WALLACE: That's — I think you have got a bumper sticker right there, Senator.

SIMPSON: It's terrible.

WALLACE: Mr. Bowles, Congressman Raul Grijalva, the head of the Progressive Caucus, is already complaining about what you guys may do to social spending, and he says this — "It's all about cut, cut, cut." Do you really think the Democrats are willing to go along with cuts to entitlements and other social programs?

BOWLES: They have to. If we're going to be serious about balancing the federal budget and righting this fiscal ship, then we have got to have everything on the table, and that includes the entitlement programs. We'll never get to balance unless they're on the table.

WALLACE: Let's talk about some specifics that you are going to have to face, and Senator Simpson, let's pick up on what Mr. Bowles just said. Speaking for yourself now, not — just as one member of the commission, do you see big savings to be made in Social Security?

SIMPSON: Social Security doesn't — if people of good will can get together on that baby, we can solve that one in half a day. Social Security is the least of our problems.

But the thing that is really impossible to believe is that whatever adjustment we make and whatever has been suggested for the last 10 years in Social Security reform, from top to bottom, you know, new dates, more contribution, none of that affects anybody over 57. Where do I get my mail? From these old cats 70 and 80 years old who are not affected in one whiff. People who live in gated communities and drive their Lexus to the Perkins (ph) restaurant to get the AARP discount. This is madness.

WALLACE: So if you can do it in half a day, give us a quick formula, you know, give us bullet points. What is it that you think you have to do? Or what can easily be done to save trillions of dollars out of Social Security?

SIMPSON: What we have to do is re-establish trust. It's corny, really corny to say that the 18 of us have to establish trust. Knowing that nobody is going to lay there in the weeds and leak stuff, knowing that nobody is just there to drop a bomb or come armed and just fray the whole thing. And if it doesn't work, I'll go home to Codey (ph) and I won't suck my thumb and I'll say I did my very best.

(CROSSTALK)

WALLACE: Are you talking about — and I understand you are talking about people under 57. You are talking about raising the retirement age, are you talking about higher taxes?

SIMPSON: I don't know. But I know that there are tanks, think tanks all over the country who have talked how to resolve Social Security. And just like in '83 when Moynihan and Dole and thoughtful people on both sides of the aisle got together, it didn't take them very long to solve it because they had all the facts they needed. So do we.

WALLACE: Mr. Bowles, Barack Obama — I don't have to tell you — campaigned in 2008 for president on a flat pledge that he would not raise any taxes — not income taxes, not any taxes — on people making less than $250,000 a year. Do you feel bound by the president's pledge?

BOWLES: What I feel bound by is the president looked Senator Simpson and me in the eye and he said, everything is on the table. So we are going to look at every single way to right this fiscal ship, whether it's cutting those sacred cows that you just talked about, or raising revenue. We have to have everything on the table. We have to discuss it fully. We have to establish trust. And once we do that, then we've got a chance just like we did in 1997, to get to balance.

WALLACE: Mr. Bowles, what do you think of a value-added tax?

BOWLES: Look, I think it's something that ought to be on the table. I think there are many good arguments that you can make for a value-added tax or consumption tax, as opposed to a tax on wages. But I think it's just one of the things that ought to be on the table that we ought to discuss. I'm not for taking anything off the table.

WALLACE: But, again, as one member of the commission, do you have an opinion? Do you think it's a good idea or a bad idea?

BOWLES: Oh, I have an opinion about lots of things. But what I want to see is everything go on the table. I want to see the pros and cons discussed, and then I want to see us make some decisions and some hard recommendations.

WALLACE: Senator Simpson, what do you think of an value-added tax?

SIMPSON: Well, I think that if everybody would get serious — you can't do a value-added tax without dealing with the income tax. So if you just want to shriek into the vapors, the value-added tax is going to destroy everybody, fine. But anything we do, we'll be doing in some kind of balance.

You can't have a VAT tax and then leave the present structure. Look at Kent Conrad, who is a member of this commission. He has written a remarkable book about the entire income tax, how unfair the whole thing is.

We have the ability, and I hope the trust of each other, to adjust and put together a package. And if the American people and the Congress don't like it, then just let them sink, because Greece is sinking on debt and deficit; Spain is next; Portugal is next. How would you like to be the United States of America when China pulls the tin cup and says we don't want t-bills, we want money? Now, that's where we are. It's serious business.

WALLACE: All right, Senator, your deadline for coming up with a proposal for the president and Congress is December 1, which just coincidentally is after the election. Is that a cop-out? Are you, in effect, giving politicians a pass on having to say what they think about this and preventing voters from being able to say in the election what they think about these ideas?

SIMPSON: Yes, Erskine and I are involved in a project, screw the American people, fool them, fake them out. I mean, what is this about? December 1 has to be after the election. One of the congressmen wanted it October 1. What a CYA that is! Do it on October 1 and then pick a part that can get you re-elected. And so we're going to come up — I hope we can come up with legislative language. What do you think of that? Options in (inaudible) legislative language. What is a cop-out about reporting on December 1 to the most important thing that effects every American for the next, you know, decade? What is the cop-out about that?

BOWLES: I think Al is totally right. It's not a cop-out. It's a cop-in. It gets the politics out of it and gives us a chance to build up some trust to get to some real hard recommendations.

WALLACE: Finally, gentlemen — and let me ask you both, and I'll start with you, Mr. Bowles — realistically — and I looked, over the course of the last two decades, there have been four separate commissions on some of these issues and none of their recommendations on tax reform, Medicare, Social Security, none of their recommendations have become law. So let me ask you as you embark on this — and I'll start with you, Mr. Bowles — what do you think are the chances that you will be able to come up with recommendations that become law and take a big chunk out of the debt?

BOWLES: Neither one of us have any idea. You know that, Chris. But I do know that in 1997 when President Clinton brought me back to, quote, balance the budget, not a soul believed it could be done. We established trust on both sides and we made some real progress.

I believe working with Al Simpson and working with this commission, we can make some real progress.

WALLACE: And Senator Simpson, you get the last word. What do you think of the chances that you'll actually get something done here that in effect helps your grandkids?

SIMPSON: Well, I really do. I think we can. As I say, I've been called naive. I have been on commissions. I was on the Select Commission on Immigration Refugee Policy. Didn't always work, but we came out with legislation. I was on the Iraq study group, where five Dems and five Repubs had to agree on every word. And we suggested the surge. Now they have adopted about 57 of those.

I don't look upon everything with cynicism. I am really a nut. I believe in optimism and I believe that the American people when we tell them honestly where they are — let me tell you, they are out in the street. You can talk to anybody in this country in Laramie or Charlotte or Dubuque and they will say, something is very wrong here. And what do we have to do? And we're going to try to tell them.

WALLACE: Senator Simpson, Mr. Bowles, I want to thank you both so much for talking with us. We'll follow the commission's work and over the next six months, please come back, gentlemen.

BOWLES: Thank you very much.

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